BPT Professional Notes
Ch 1 – Ethics
Standards, Threats/ Safeguards
• Fundamental principles – COPPI
• Threats – FAIRS
Standards for Tax Planning (PCRT)
• Professional conduct in relation to tax – PCRT has been produced
5 Standards
• Client Specific – must be specific to clients circumstances & be informed of
wider implications
• Lawful – all members have to act lawfully and with integrity
• Disclosure & Transparency –
o Tax advice mustn’t rely on HMRC having inadequate information
o Any disclosure should represent relevant facts
• Tax Planning Arrangements – Members shouldn’t create structures that achieve
results contrary to parliament or exploit shortcomings
• Professional Judgement and Appropriate Documentation – Members must exert
professional judgement on matters
o Notes should be kept on timely bases of rationale for judgements made
Conflicts of Interest
COI – take steps
• Notify parties of potential conflict
• Obtain consent to act
• Cease acting for a party if refused
If consent:
• Separate engagement teams
• Procedures to prevent information access
• Review safeguards
• Resign if cannot be reduced to appropriate level
Ethical Conflict
Consider:
• Fundamental principles
• Parties involved
• Ethical issues involved
• Relevant facts
If unresolved:
• Seek advise within firm
• Seek legal advice/from professional body
• Consider withdrawing
,Disclosure of information/Confidentiality
Accountant Can disclose if:
• Required by law & authorized by client
o Legal proceedings
o Infringement of law – Money laundering
• Duty to disclose
o Comply with ethical standards
o Protect professional interests
o Comply with quality review
o Respond to investigation by regulatory body
Errors
Accountant discovers error:
• Disclose to HMRC ASAP
• Include in letter of engagement authority to advise to HMRC or client consent
required
• Consent withheld
o Seek legal advice
o Cease acting
Overpayment of tax
• Client advised ASAP of error and repayment due
Underpayment of Tax
• Additional costs to correct error from client
o Claim for compensation for such expenses from HMRC
Client Acceptance and Regulatory Requirements
Practice Management
Accepting Clients –
• Any threats to principles
• Is firm competent to provide services
Engagement letters
• Clear what capacity accountant acts in
• Covers scope of engagement
Capacity as agent/principal
• If agent – accountant doesn’t have responsibility
• If principal: gives tax advice
o Liable for incorrect advice
,Tax returns responsibility:
• Clients responsibility
• Client may be recommended fuller disclosure than necessary
o Client should be made aware of implications of this
Indemnity Insurance:
• Adequate cover should be in place for minimum level of cover:
o 1.5 mil per claim
• If Annual fee income <£600,000
o 2.5 x Gross fee income per claim
• Cover required for 2 yrs ceasing to practice – preferably 6
Data protection:
• GDPR regulations
• Inform Information Commissioner’s o^ice of any breach
• Failure to do so = criminal o^ense
Accountability of Senior Accounting O^icer
• Large companies ( >200m turnover &/or £2bn BS total) = appoint SAO
• Required to:
o Certify accounting systems for accurate tax reporting
o Specify nature of inadequacies
• Penalty for non compliance = £5,000
o Personal liability of SAO
Money Laundering
O^ence
• Laundering
• Failure to report – POCA = o^ence
• Tipping o^
Penalties
• Guilty of ML, failure to report or tipping o^ can receive unlimited fines
o 14 years for ML o^ences
o 5 years for not reporting
o 2 years for tip o^ in prison
Defense
• Didn’t know/suspect ML or terrorist financing
• Information was privileged
• ML taking place in another country (Not for terrorism)
,Procedures
• Accountants should appoint MRLO
• Establish internal procedures to reduce risk of ML (training)
• Verify identity of new clients – keep documents for 5 years after termination
• Maintain records of transactions for each client for 5 years
• Due diligence on new clients
Confidentiality
• Protected disclosure - Can disclose without consent
Tax planning, Tax avoidance, Tax Evasion
• Planning = using schemes to reduce tax
o Legal
o PCRT encourages this
• Evasion = Misleading HMRC
o Suppressing info that HMRC is entitled
o Deliberately giving HMRC wrong info
• Avoidance = using tax a^airs to minimise tax bill
o Should be disclosed to HMRC
Detering Avoidance –Finance Act 2002
• Secure/freeze promoters assets for penalty commenced under DOTAS/POTAS/
DASVOIT regime
o Prevents them hiding assets
• Ask court to take down enabling schemes if not in public interest
o Disqualify directors
Large companies - Required to publish Tax strategies
o 7.5k fine for non compliance
Large companies - Notify HMRC when using uncertain tax treatment
o Required if tax advantage £5m > 12 months
Penalties for O^shore Tax evasion
• Higher of
o 100% Potential lost revenue
o £3,000
• HMRC can publish this if:
o PLR > £25K
o 5 penalties in last 5 yrs
Criminal finances Act 2017:
• Criminal liability for bodies who prevent facilitation of tax evasion
, • Have to prove
o Criminal evasion, facilitation of evasion (i.e employee) & failure of body to
prevent -even if unsuccessful
• Defence = procedures in place
Company Directors: jointly and several liability
• HMRC can issue several liability notices to directors where company has entered
into insolvency if
o Tax evasion/avoidance where director benefited
o Company received penalty for avoidance/evasion
o Director involved with other companies that have been insolvent with
liabilities over certain threshold
General Anti Abuse (GAAR) and BEPS
GAAR –
• Counters tax advantages
o Applies to IT, CGT, IHT, SDLT, NICs
• Main purpose = tax advantage
• When applies - Reasonable/just adjustments to counter the advantages
GAAR advisory Pannel
• HMRC challenge under GAAR – go to Independent advisory panel
• Judge if arrangements = reasonable
• If not - Promotor of scheme meets POTAS regime
o If significant – issue conduct notice –
§ Upheld = penalties
o HMRC can also issue counteraction notice – adjustments needed under
GAAR
Client advise for GAAR
• Training, advise clients, Review existing planning, Monitor GAAR panel decisions
Penalties
• 60% counteracted tax
o Return/claim submitted to HMRC
o Tax advantage gained
Ch 1 – Ethics
Standards, Threats/ Safeguards
• Fundamental principles – COPPI
• Threats – FAIRS
Standards for Tax Planning (PCRT)
• Professional conduct in relation to tax – PCRT has been produced
5 Standards
• Client Specific – must be specific to clients circumstances & be informed of
wider implications
• Lawful – all members have to act lawfully and with integrity
• Disclosure & Transparency –
o Tax advice mustn’t rely on HMRC having inadequate information
o Any disclosure should represent relevant facts
• Tax Planning Arrangements – Members shouldn’t create structures that achieve
results contrary to parliament or exploit shortcomings
• Professional Judgement and Appropriate Documentation – Members must exert
professional judgement on matters
o Notes should be kept on timely bases of rationale for judgements made
Conflicts of Interest
COI – take steps
• Notify parties of potential conflict
• Obtain consent to act
• Cease acting for a party if refused
If consent:
• Separate engagement teams
• Procedures to prevent information access
• Review safeguards
• Resign if cannot be reduced to appropriate level
Ethical Conflict
Consider:
• Fundamental principles
• Parties involved
• Ethical issues involved
• Relevant facts
If unresolved:
• Seek advise within firm
• Seek legal advice/from professional body
• Consider withdrawing
,Disclosure of information/Confidentiality
Accountant Can disclose if:
• Required by law & authorized by client
o Legal proceedings
o Infringement of law – Money laundering
• Duty to disclose
o Comply with ethical standards
o Protect professional interests
o Comply with quality review
o Respond to investigation by regulatory body
Errors
Accountant discovers error:
• Disclose to HMRC ASAP
• Include in letter of engagement authority to advise to HMRC or client consent
required
• Consent withheld
o Seek legal advice
o Cease acting
Overpayment of tax
• Client advised ASAP of error and repayment due
Underpayment of Tax
• Additional costs to correct error from client
o Claim for compensation for such expenses from HMRC
Client Acceptance and Regulatory Requirements
Practice Management
Accepting Clients –
• Any threats to principles
• Is firm competent to provide services
Engagement letters
• Clear what capacity accountant acts in
• Covers scope of engagement
Capacity as agent/principal
• If agent – accountant doesn’t have responsibility
• If principal: gives tax advice
o Liable for incorrect advice
,Tax returns responsibility:
• Clients responsibility
• Client may be recommended fuller disclosure than necessary
o Client should be made aware of implications of this
Indemnity Insurance:
• Adequate cover should be in place for minimum level of cover:
o 1.5 mil per claim
• If Annual fee income <£600,000
o 2.5 x Gross fee income per claim
• Cover required for 2 yrs ceasing to practice – preferably 6
Data protection:
• GDPR regulations
• Inform Information Commissioner’s o^ice of any breach
• Failure to do so = criminal o^ense
Accountability of Senior Accounting O^icer
• Large companies ( >200m turnover &/or £2bn BS total) = appoint SAO
• Required to:
o Certify accounting systems for accurate tax reporting
o Specify nature of inadequacies
• Penalty for non compliance = £5,000
o Personal liability of SAO
Money Laundering
O^ence
• Laundering
• Failure to report – POCA = o^ence
• Tipping o^
Penalties
• Guilty of ML, failure to report or tipping o^ can receive unlimited fines
o 14 years for ML o^ences
o 5 years for not reporting
o 2 years for tip o^ in prison
Defense
• Didn’t know/suspect ML or terrorist financing
• Information was privileged
• ML taking place in another country (Not for terrorism)
,Procedures
• Accountants should appoint MRLO
• Establish internal procedures to reduce risk of ML (training)
• Verify identity of new clients – keep documents for 5 years after termination
• Maintain records of transactions for each client for 5 years
• Due diligence on new clients
Confidentiality
• Protected disclosure - Can disclose without consent
Tax planning, Tax avoidance, Tax Evasion
• Planning = using schemes to reduce tax
o Legal
o PCRT encourages this
• Evasion = Misleading HMRC
o Suppressing info that HMRC is entitled
o Deliberately giving HMRC wrong info
• Avoidance = using tax a^airs to minimise tax bill
o Should be disclosed to HMRC
Detering Avoidance –Finance Act 2002
• Secure/freeze promoters assets for penalty commenced under DOTAS/POTAS/
DASVOIT regime
o Prevents them hiding assets
• Ask court to take down enabling schemes if not in public interest
o Disqualify directors
Large companies - Required to publish Tax strategies
o 7.5k fine for non compliance
Large companies - Notify HMRC when using uncertain tax treatment
o Required if tax advantage £5m > 12 months
Penalties for O^shore Tax evasion
• Higher of
o 100% Potential lost revenue
o £3,000
• HMRC can publish this if:
o PLR > £25K
o 5 penalties in last 5 yrs
Criminal finances Act 2017:
• Criminal liability for bodies who prevent facilitation of tax evasion
, • Have to prove
o Criminal evasion, facilitation of evasion (i.e employee) & failure of body to
prevent -even if unsuccessful
• Defence = procedures in place
Company Directors: jointly and several liability
• HMRC can issue several liability notices to directors where company has entered
into insolvency if
o Tax evasion/avoidance where director benefited
o Company received penalty for avoidance/evasion
o Director involved with other companies that have been insolvent with
liabilities over certain threshold
General Anti Abuse (GAAR) and BEPS
GAAR –
• Counters tax advantages
o Applies to IT, CGT, IHT, SDLT, NICs
• Main purpose = tax advantage
• When applies - Reasonable/just adjustments to counter the advantages
GAAR advisory Pannel
• HMRC challenge under GAAR – go to Independent advisory panel
• Judge if arrangements = reasonable
• If not - Promotor of scheme meets POTAS regime
o If significant – issue conduct notice –
§ Upheld = penalties
o HMRC can also issue counteraction notice – adjustments needed under
GAAR
Client advise for GAAR
• Training, advise clients, Review existing planning, Monitor GAAR panel decisions
Penalties
• 60% counteracted tax
o Return/claim submitted to HMRC
o Tax advantage gained
